India eyes diversifying imports, exports to limit fallout of US, China demand slowdown

India's goods exports came in at a nine-month low in July 2023

With an eye on limiting the impact of global headwinds and a demand slowdown across India's major trading partners including the US and China, New Delhi is looking to diversify its exports and imports basket.

Measures to arrest the impact of global headwinds include diversifying import source nations, scouting for newer markets for Indian goods as well as non-tariff barriers to push local manufacturing at the same time, a senior government official said.

Demand for Indian goods in key markets such as US, China, Bangladesh and Singapore has seen a significant drop in recent months. Latest data shows that India's exports to Beijing, the fourth-largest buyer of Indian goods, dropped 14.9 percent in April-July 2023 compared to the same period last fiscal. Whereas, outbound shipments to the US, India's top merchandise export destination, fell 12.48 percent on year during the first four months of the current fiscal.

"A slowdown in markets such as the US and China has impacted exports in this sector (gems and jewellery) quite a bit and this is one area where we are looking for diversification," Satya Srinivas, Additional Secretary, Commerce Ministry said during a briefing on August 14. India's outbound shipments of gems and jewelry fell 3.68 percent on year in the first four months of 2023-24.

India's exports came in at a nine-month low falling 16 percent to $32.25 billion in July as outbound shipments faced lackluster demand owing to a slowdown in major trading partners including China and the US, government data released on August 14 showed, while trade deficit for the last month widened marginally versus June.

New Delhi is also banking on its production-linked incentive (PLI) scheme to start showing results soon across all sectors and spur local manufacturing. Though, there is currently no plans to levy import licensing curbs on other electronic items after the recent imposition on laptops and desktops, the government is constantly monitoring imports to reduce dependence on a few countries, the government official cited earlier said.

"We have a PLI Scheme, we are monitoring our imports and we don't want undue dependence on limited sources of imports, and want to diversify both exports and imports. We are evaluating our position in consultation with other ministries but there is nothing on the offing currently," the official added.

The Union government on August 3 notified restrictions on the import of laptops, tablets, personal computers, ultra-small form factor computers, and servers. While exemptions were provided, the free import of these goods would be permitted only against a licence. The move was primarily seen as an attempt by the Indian government to reduce reliance on imports and push for domestic manufacturing via the PLI scheme.